UPDATE 1-Spain's Repsol cancels LNG cargoes to Argentina

May 18, 2012|Reuters

* Repsol informs Enarsa it will not send LNG cargoes

* Gov't says already secured alternative supplies

(Adds government response)

By Alejandro Lifschitz

BUENOS AIRES, May 18 (Reuters) - Spain's Repsol has canceledits contract to supply Argentina with liquefied natural gas(LNG), just weeks after the country seized control of the energycompany's majority stake in YPF, a document obtainedby Reuters on Friday showed.

Argentina relies on LNG imports to meet between 20 percentand 30 percent of domestic natural gas consumption. Repsol was to supply 10 cargoes to Argentina this year out of80 from all suppliers to help meet peak demand from June toSeptember.

Argentina's Planning Ministry said Repsol's cargoes hadalready been replaced by other providers "because we knew theywould fail to comply, in the same way they did during all theyears they controlled YPF."

Repsol said in a letter to Argentine state energy companyEnarsa, dated May 17, that Enarsa had breached the LNG contractby seeking to renegotiate the price of shipments and modify thetimetable for deliveries.

Earlier this month, an energy sector source said the Spanishcompany might halt its LNG sales.

Repsol said Enarsa's conduct and the Argentine government's"unlawful and discriminatory" takeover of YPF showed the countryhad "no intention of complying with, or continuing to be boundby, the agreement", according to the letter.